Contributions Increase For Pension Scheme

The Local Government Pension Scheme (LGPS) regulations, laid before parliament on 4 April and now law, contain a banded contribution rate for scheme members based upon salary. This is different from the original draft regulations upon which ACM was consulted. In the draft regulations, published at the end of last year, it was proposed to have a lower contribution rate of 5.5% for pensionable earnings up to £12,000 and a higher rate of 7.5% for earnings over £12,000.

The draft was more or less in line with ACM’s position. In our original submission to the review group, we proposed a single contribution rate. However, we did recognise that there are many lower paid employees in the LGPS and so we said that if a tiered system was introduced, the first £12,000 of an individual’s earnings should be at a lower rate, with a single rate above that. This was what the review group finally proposed and what subsequently appeared in the draft regulations.

However, under the new banded system, higher paid scheme members will now pay a flat rate. The majority of ACM members will therefore pay between 6.5% and 7.5%, whereas their ACM counterparts in the Teachers’ pension scheme will be paying 6.4%.

Although there are still many similarities, the differences between the two schemes do appear more marked; and this may have implications for recruitment and selection to some non-teaching posts. ACM Council has not yet taken a view on this but will consider the matter next week. In the meantime, if any branch or individual members wishes to leave a comment below these will be forwarded to Council before their meeting.